Securities: Jones v. Harris Associates L.P. SECURITIES

Jones v. Harris Associates L.P. addresses the appropriate framework for assessing claims that a mutual fund adviser has breached its fiduciary duty with respect to receipt of compensation in violation of Section 36(b) of the Investment Company Act. WilmerHale filed an amicus brief in support of respondents on behalf of the Investment Company Institute, an association of SEC-registered funds, their investment advisers, underwriters and fund directors committed to encouraging high ethical standards for all industry participants.

The brief argues that the Court should apply the framework adopted by the Second Circuit in Gartenberg v. Merrill Lynch Investment Asset Management, Inc., 694 F.2d 923 (2d Cir. 1982), under which courts assess a variety of factors in determining whether an adviser’s fee is excessive and give considerable weight to independent fund directors’ approval of the fee. Petitioners, while also nominally supporting the Gartenberg approach, argue that courts should give nearly dispositive weight to a comparison between the fees an adviser receives from mutual funds and those it receives from non-mutual fund institutional clients.

The WilmerHale attorneys on the brief were Seth Waxman, Paul Wolfson, Lori Martin, Rebecca Deutsch and Daniel Kearney.

Jones v. Harris Associates L.P. addresses the appropriate framework for assessing claims that a mutual fund adviser has breached its fiduciary duty with respect to receipt of compensation in violation of Section 36(b) of the Investment Company Act. WilmerHale filed an amicus brief in support of respondents on behalf of the Investment Company Institute, an association of SEC-registered funds, their investment advisers, underwriters and fund directors committed to encouraging high ethical standards for all industry participants.

The brief argues that the Court should apply the framework adopted by the Second Circuit in Gartenberg v. Merrill Lynch Investment Asset Management, Inc., 694 F.2d 923 (2d Cir. 1982), under which courts assess a variety of factors in determining whether an adviser’s fee is excessive and give considerable weight to independent fund directors’ approval of the fee. Petitioners, while also nominally supporting the Gartenberg approach, argue that courts should give nearly dispositive weight to a comparison between the fees an adviser receives from mutual funds and those it receives from non-mutual fund institutional clients.

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